As the financial year comes to a close, it's crucial for Australians to review their tax strategies to maximise deductions and ensure compliance. Here are five essential tax tips to consider before 30 June:
Make Deductible Super Contributions Contributing to your superannuation is a smart way to reduce your taxable income while securing your future. Individuals can make personal deductible contributions to their super fund, which are taxed at a concessional rate of 15%. This not only lowers your taxable income but also boosts your retirement savings. Ensure your contributions are within the annual cap of $27,500 for the 2023/24 financial year to avoid excess contributions tax.
Utilise the Superannuation Co-Contribution Scheme If your total income is less than $58,445, consider making an after-tax super contribution to benefit from the government co-contribution scheme. For every dollar you contribute, the government will match it up to a maximum of $500. This is particularly advantageous for low to middle-income earners seeking to enhance their super savings with additional government support.
Maximise Tax Deductions through Investment Property Expenses For those with investment properties, year-end is an excellent time to review and claim eligible deductions. These can include interest on loans, property management fees, maintenance costs, and depreciation on assets such as appliances and furniture. Ensure you keep detailed records and receipts for all expenses to substantiate your claims.
Consider Deductible Contributions into a Suspense Account for SMSFs If you have a self-managed super fund (SMSF), you might find yourself needing to make a deductible contribution but lacking specific allocation plans. In such cases, placing these contributions into a suspense account can be beneficial. This allows the fund to receive the contributions within the financial year, while giving you additional time to decide on their precise allocation.
Prepay Expenses and Bring Forward Deductions Small business owners and individuals can consider prepaying expenses to bring forward deductions. This strategy is particularly useful if you expect a lower income next year or anticipate moving to a higher tax bracket. Prepaying expenses like insurance premiums, subscriptions, and interest on loans (for up to 12 months) can help reduce your taxable income for the current year.
Trust Distributions: If you have a discretionary trust, you would have seen from our blog that it is vital to ensure that trust distributions are made by 30 June. Make sure it is completed by this time and take full advantage of streaming.
Conclusion
As the 30 June deadline approaches, taking these proactive steps can significantly enhance your tax position. Whether it's boosting your super contributions, maximising property deductions, or prepaying expenses, these strategies can lead to substantial tax savings. Remember to maintain thorough documentation and consult with a tax professional to tailor these tips to your specific circumstances. For detailed advice and planning, consider seeking formal guidance from Abbott and Mourly Lawyers.
By being strategic and diligent, you can ensure you're not only compliant but also optimising your financial health as the financial year wraps up.